GLOBAL MARKETS-Stocks rise on firm earnings, oil

* Stocks boosted by strong U.S. corporate earnings

* Oil prices above $81 on gasoline supply draw

* Dollar weakens on interest rate anxiety (Updates with U.S. markets, changes byline, dateline; previous LONDON)

By Manuela Badawy

NEW YORK, Oct 21 (Reuters) - Unexpectedly strong U.S. corporate earnings and higher oil prices boosted stocks worldwide on Wednesday while the euro broke above $1.50 for the first time in 14 months on expectations U.S. interest rates will stay low.

Wall Street led the rise in stocks as results from banks including Morgan Stanley and Wells Fargo topped expectations, while a rise in oil drove energy shares higher.

Morgan Stanley Capital International's world stock index <.MIWD00000PUS> was up 0.56 percent, while the Dow Jones industrial average <.DJI> gained 0.4 percent to 10,088.

"We've rallied out of the idea that (the banks) are not going out of business, and now it becomes more how are you running your business?" said John Canally, investment strategist and economist for LPL Financial in Boston.

Morgan Stanley reported better-than expected quarterly profit on strong fixed income sales and trading revenue and improved investment banking underwriting results, sending its shares up 6.9 percent. For more see [ID:nN21432907].

The FTSEurofirst 300 <.FTEU3> index of top European shares rose 0.45 percent, recouping almost all Tuesday's losses and taking it close to its highest close since Oct. 3, 2008.

Oil prices rose more than 3 percent, above $81 a barrel, the highest in a year after U.S. government data showed gasoline stockpiles fell a lot more than expected last week. This supported energy stocks and emerging economies, which are set to recover at a faster speed than some developed markets.

China's voracious appetite for commodities and continued growth has helped countries such as Brazil, where heavyweight companies such as energy company Petrobras and miner Vale are tied to the trade in raw materials.

MSCI's Latin American stock index <.MILA00000PUS> rose more than 2.5 percent fueled by investors betting potential growth in Brazilian companies outweighed the disadvantage of a new foreign investment tax.

INTEREST RATE ANXIETY

U.S. Treasury debt prices fell, with the benchmark 10-year U.S. Treasury note down 17/32 to yield 3.41 percent as the upbeat equities market undermined the safe-haven appeal of government debt.

Treasuries also tracked European bond markets lower after less-than-dovish comments from the Bank of England triggered a fresh anxiety over eventual interest rate hikes. [ID:nLL64535]

The dollar fell 0.75 percent against a basket of other major currencies <.DXY>, heading for its 10th loss in 15 sessions this month. The index has been in the red for seven of the past eight months.

Sentiment towards the currency continues to be hurt by the prospect of benchmark U.S. interest rates staying at exceptionally low levels. Low rates make the dollar less attractive to investors than higher-yielding currencies more closely correlated with economic recovery.

The British pound gained 1.4 percent against the U.S. dollar to $1.6614 , and heavy dollar selling helped push the euro to $1.5003 before it eased to $1.4982, up 0.3 percent.

In China, the State Council said economic recovery had been "consolidated," a shift in rhetoric some analysts say may be a first hint that officials are at least thinking about how to normalize loose monetary and fiscal polices. [ID:nPEK213103] (Additional reporting by Leah Schnurr, Chris Reese and Steve C. Johnson in New York, Jeremy Gaunt in London and Luciana Lopez in Sao Paulo; Editing by James Dalgleish)